Yep, you read that right, you’re about to receive the best artificial intelligence dividend yielding stock in your lap.

First, let’s review my number one rule in dividend yielding investing, it’s simple…

“don’t spend good money on a bad dividend”.

Look at AT&T (T).

Everyone and their mother asks me about buying AT&T for the “great” 6.5% dividend.

They don’t acknowledge the fact that AT&T has lost 5% over the last year and is down 25% for the last four years.

STOP BUYING CRAPPY DIVIDENDS!

Instead, think about buying the best dividend yield, and value, in the AI space, International Business Machines (IBM).

That’s right, we’re talking about the IBM that your grandpa bought as part of his “Blue Chip” portfolio. Hell, he may have even bought a share for you on your first birthday.

Ironically, my grandpa bought me shares of AT&T when I was a kid. No kidding, that’s a true story.

Here are the stats: IBM shares boasts a 4.5% dividend yield. IBM is up 15% for 2023 and it’s breaking to new all-time highs. Earnings and revenue are now showing their best positive trend since early 2021.

Value? The stock’s Price/Earnings ratio is a 21. That’s right, 21! Not a 61 like NVDA. This is a value play in the AI space.

Here’s what I really like though: IBM’s AI story is only starting. The company is service based, they’re not making hardware like Nvidia and other chip makers.

IBM’s big money blowout will happen as businesses start to adopt AI into their daily operations. AI is still in the early adoption phase, which means we’re getting a growth and value stock as IBM will benefit from the adoption curve.

Final note: I love the sentiment trade on IBM. While most AI stocks have 90% or more of the analysts’ recommendation to “buy,” fewer than half of the analysts following IBM have it ranked a “buy.”

In addition, the analysts’ target price for the stock is $153. This stock is going to see a bunch of price target upgrades in the new year as they wake up and see the opportunity in this Stealth AI stock.

Here’s my Bottom Line: Shares of IBM rocketed from $155 to $165 in just over a week leaving the stock temporarily “overbought.”

I already own the stock but will add to my position if we see a $155 print which is where the 20-day “trader’s trendline” sits for support.

My outlook for the stock includes a target of $200 over the next two quarters.

And yes… I would be buying shares of IBM for my grandchildren if I had them.

— Chris Johnson

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Source: Money Morning